Slaying the coal dinosaurs

Abattle over antiquated coal plants that started in North Carolina landed in the U.S. Supreme Court this year, setting precedent nationwide for whether utilities should clean-up old plants.

Coal plants built decades ago are exempt from modern pollution standards. Environmental groups want to see these grandfathered plants put out to pasture while utility companies want to keep them limping along.

When the old plants were grandfathered in, everyone assumed they would eventually die, and modern ones, along with modern pollution controls, would take over. That’s how the law was written, anyway, but that’s not how it’s played out. Instead, power companies across the nation keep their old plants operating without installing the latest emission technology.

Legally, utilities can conduct basic maintenance on their plants to keep them running, but can’t overhaul the whole plant without losing their grandfathered status. Utilities also can’t ramp up production if they want to keep their grandfathered status.

A federal lawsuit against Duke Power — involving seven coal power plants in North Carolina — claims the utility violated both of these standards.

Duke Power increased energy production at their old coal plants, along with emissions, by as much as 50 percent above grandfathered levels, according to the lawsuit. To get there, Duke did more than just basic maintenance to its plant.

“What Duke is saying is to drop a new engine in your 1978 Pinto is routine maintenance,” said Melinda Pierson, communications manager for Southern Environmental Law Center. “What we are saying is dropping a new engine in a car is not routine maintenance. It is a major overhaul, and you should have upgraded to something better by now. The modifications were major enough that they extended the life of the plant. Therefore Duke should be required to install modern pollution controls.”

Duke argued otherwise.

“Our contention is that the work was routine maintenance,” said Tom Williams, a spokesperson for Duke Energy. Williams said the Pinto analogy is seriously flawed. Williams said environmental regulators knew about the repairs and maintenance to the plants, conducted at various times during the 1990s.

“It was work done in plain view,” Williams said. “They are retroactively changing the rules after the work is done.”

Duke Energy had a second line of defense as well. It claimed the work on the plants did not lead to an increase in emissions. Of course, that depends on your definition of “increase.” As basic as it might seem, this semantics battle apparently took the Supreme Court to figure out.

Duke was emitting more pollution from its grandfathered plants over the course of a year, but its hourly emissions were unchanged. It was simply running the plant more hours in the year, thanks to equipment overhauls that reduced downtime. Duke wanted the increase in annual emissions to be overlooked and instead based the definition of an increase on its hourly pollution levels.

The case dates back to 1999 and was brought against Duke by Environmental Defense in conjunction with the Southern Environmental Law Center, which provided the legal team. The Environmental Protection Agency was also a party to the suit, which was originally heard in federal court in Greensboro in 2005.

The first ruling favored Duke. The judge for the Fourth Circuit Court of Appeals in Greensboro sided with Duke’s definition of increased emissions. As long as hourly emissions remained the same, the total annual emissions didn’t matter. The two environmental groups promptly appealed to the U.S. Supreme Court. In April, the Supreme Court handed down its decision, reversing the lower court’s decision and siding with environmentalists.

A total annual increase in emissions constituted an increase, the justices ruled unanimously. But that’s as far as the Supreme Court went: deciding the definition of the word “increase.” Now the case goes back to the Fourth Circuit in Greensboro for an actual trial. The outcome is a fait accompli, according to Pierson.

“We know and Duke knows that with that definition they have lost,” Pierson said. “There is no way they can dispute the fact that their emissions increased on a per year basis. They would either have to get those plants off line or install these pollution controls.”

The Supreme Court only ruled on one of Duke’s two contentions. Still undetermined is what constitutes basic upkeep versus a major overhaul of a plant. Duke is proceeding with the case in federal court, primarily to settle that issue, which could set a precedent for grandfathered coal plants around the country.

“We want to know what the rules of the road are going forward, what constitutes routine maintenance,” Williams said.

If Duke loses in federal court it would have to install emission controls on the part of its plants that received the illegal overhauls and bring emissions back down. The trial is scheduled for September.

Ironically, Duke is already putting modern pollution controls on most of the old coal plants in question to comply with the N.C. Clean Smokestacks Act of 2002. Duke Energy, which supported the Clean Smokestack Act, is putting pollution controls at four of its seven coal plants. It’s completing one a year between now and 2010, finishing three years ahead of what the state law calls for.

“Ironically the emissions are being reduced as a result of the Clean Smokestacks Act,” Williams said. “That’s one of our points, this is a dated case. The work is already being done to reduce the emissions at the plants, which was the objective of the people who brought the case in the first place.”

Regardless, Duke plans to keep fighting, primarily to chart a precedent that will apply to Duke’s coal plants in other states destined to face a similar quandary.

Far-reaching precedent

The Supreme Court’s ruling in the Duke Energy case is already having repercussions across the country. Duke isn’t the only utility pushing the grandfathered status of old coal plants to the limit. Utilities across the country have been doing so as well — and facing similar legal objections by environmental groups.

The Duke Power case was the first one to make it to the Supreme Court, however. In the three months since the ruling, it has affected similar cases in Alabama and Kentucky. For environmentalists, the Duke case was a hard-won victory.

While the case was waiting appeal before the Supreme Court, the battleground over grandfathered coal plants temporarily shifted to the White House. The Bush Administration proposed new language that would have favored utility industries. The new language would have formalized the interpretation utilities were arguing for. As a result of the new administration in power, the Environmental Protection Agency lost interest in the Duke case, which had been launched in the last year of the Clinton Administration.

“The Bush Administration said ‘let’s just get out of this.’ The Bush Administration said in fact, ‘we’ll rewrite the law,’” Pierson said.

Without the EPA on board, that left Environmental Defense and Southern Environmental Law Center to press on their own. EPA remained a bystander in the case.